AICPA Offers Feedback to GASB on Several Important Due Process Documents

February 24, 2015

The American Institute of CPAs’ (AICPA) State and Local Government Expert Panel (SLGEP) has recently provided key insights to the Governmental Accounting Standards Board (GASB) on several exposure documents. 

GAAP Hierarchy Project

In its December 31, 2014, letter on the GASB Exposure Draft (ED), The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, the SLGEP expressed its support of the Board’s proposal to reduce GAAP for state and local governments to two levels in an effort to improve financial reporting for governments.  In particular, the SLGEP expressed appreciation that the GASB’s proposal would maintain AICPA literature specifically cleared by the GASB in category (b) GAAP. 

However, the Panel expressed concern about the lack of an authoritative definition of a government in GASB literature and Financial Accounting Standards Board literature since determining whether an entity is a government is critical for purposes of determining which financial reporting framework should be applied. 

Comprehensive Implementation Guide

The SLGEP also provided comments on the GASB ED, Comprehensive Implementation Guide No. 20XX-1, in a separate letter dated January 28, 2015.  The Panel offered numerous comments on specific questions and answers included in the Comprehensive Implementation Guide (CIG), as well as suggestions for improving the usability of the document.

The purpose of this ED is to elevate the status of the CIG in the GASB GAAP hierarchy such that it will fit within the two levels of GAAP proposed by GASB in the GAAP Hierarchy project described above.  To achieve such an elevation, GASB needed to expose for comment all questions and answers currently included in the CIG.

Tax Abatements Project

In its January 29, 2015, letter, the SLGEP disagreed with the main premise of the GASB ED, Tax Abatement Disclosures, which would require governments to disclose information about property and other tax abatement agreements in the notes to the financial statements.  The SLGEP’s position was that such information would be more appropriately communicated to users as part of a government’s statistical section as it more closely aligns to the definition of supplementary information.  That is, the information is useful for placing the basic financial statements in an appropriate economic context and not “integral” or “essential.”